The State AG Report Weekly Update October 27, 2016

Consumer Protection

17 Attorneys General File Amicus Brief Regarding Class Action Lawyer Fees

  • 17 AGs, led by Arizona AG Mark Brnovich, filed an amicus brief requesting that the U.S. Supreme Court review a class action lawsuit’s settlement and address the disproportionate division of class action settlement funds between attorneys and class members.
  • According to AG Brnovich, the coalition of AGs requested that the Supreme Court review Gascho v. Global Fitness Holdings, LLC, a class action lawsuit that originally settled in the U.S. District Court for the Southern District of Ohio for $15.5 million. The U.S. Court of Appeals for the Sixth Circuit upheld the settlement as reasonable after class attorneys received $2.5 million in fees, consumers in the class received $1.6 million, and the remainder of the settlement reverted back to the defendant after the claims period ended.
  • The AGs’ brief requests that the Supreme Court grant certiorari and mandate that courts calculate attorneys’ fees based on disbursements received by consumers in class action settlements.


Pennsylvania Attorney General Files Lawsuit Against Furniture Store Over Alleged Failure to Deliver Products

  • Pennsylvania AG Bruce Beemer filed a lawsuit against the defunct furniture store Rudy’s Mart and its owner following an investigation into the store’s alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
  • According to the AG’s office, Rudy’s Mart allegedly failed to deliver furniture to consumers, failed to provide refunds, and wrote checks to consumers knowing they would bounce. The store ultimately closed without providing consumers notice of the closure, or delivering either the products they purchased or refunds for products never received.
  • The lawsuit seeks a permanent injunction against the store and its owner, restitution for affected consumers, $1,000 per violation of the Consumer Protection Law, and $3,000 per violation affecting consumers who are sixty years old or older.


False Claims Act

District of Columbia Attorney General Settles with Bank Over Alleged Failure to Prevent Fraud

  • District of Columbia AG Karl Racine reached a settlement with Bank of America, N.A., and Bank of America Corporation (collectively "Bank of America") to resolve allegations that the bank failed to put proper safeguards in place to stave off fraudulent activity by bank employees managing the District’s funds.
  • According to the AG’s office, the settlement resolves a suit the District brought against Bank of America in 2008 alleging the bank’s lack of controls while serving as the District’s depository bank contributed to the loss of millions of dollars in an embezzlement scheme between several D.C. employees and a Bank of America assistant manager.
  • Under the terms of the settlement, which is pending court approval, Bank of America must pay $13 million to the District.


DOJ Settles with Nursing Home Chain Over Alleged Billing for Excessive Treatment

  • The U.S. Department of Justice (“DOJ”) reached a settlement with Life Care Centers of America, Inc. ("Life Care"), to resolve allegations that the nursing home provider violated the False Claims Act by excessively treating patients to receive higher reimbursement from Medicare.
  • According to the DOJ’s complaint, which was originally brought forward by two whistleblowers, Life Care allegedly provided excessive treatment to seniors to qualify for the “Ultra High” Medicare reimbursement level by maximizing the number of patients who received at least 720 minutes of skilled therapy in two medical disciplines weekly. Notably, the DOJ used statistical sampling to establish liability in this case, rather than a traditional claim-by-claim review.
  • Under the terms of the settlement, Life Care must pay $145 million to the United States.


Financial Industry

Mississippi Attorney General Settles with Credit Bureaus Over Deceptive Practices

  • Mississippi AG Jim Hood reached a settlement with Experian Information Solutions, Inc., TransUnion, LLC, and Equifax, Inc. (collectively, the “credit bureaus”), to resolve allegations that the credit bureaus allowed errors to persist on credit reports and engaged in deceptive marketing practices with consumers.
  • According to the AG’s office, the credit bureaus allegedly failed to properly verify debts and failed to remove improperly listed debts from credit reports. Among other things, Experian and TransUnion also offered consumers a “free credit score” without notifying consumers that they would be automatically enrolled and charged for a monthly subscription credit monitoring service if they obtained the credit score.
  • Under the terms of the settlement, the credit bureaus must pay $7.175 million to the state and provide Mississippi consumers with unlimited free credit reports for three years and one free FICO credit score every three years. Among other things, Equifax must educate consumers about credit and how to improve their finances, and TransUnion must pay for advertisements to publicize the availability of free credit reports to consumers.



New York Attorney General Reaches Settlement with Health Insurance Company Over Pre-Authorization Requirements

  • New York AG Eric Schneiderman reached an agreement with Cigna Health and Life Insurance Company to address an investigation into the insurance company’s prior authorization requirements for medication-assisted treatment (“MAT”) for opioid use disorder.
  • According to the AG’s office, Cigna allegedly required specially-trained opioid treatment physicians to answer questions about a patient’s current treatment and medication history prior to providing authorization for the opioid addiction treatment medications buprenorphine and buprenorphine/naloxone, a process which took several days in some cases and created negative results for patients in need of immediate treatment.
  • Under the terms of the agreement, Cigna must discontinue its preauthorization requirement for MAT medications, continue its policy of not requiring prior authorization for other addiction medications, including methadone and naltrexone, and among other things, provide notification of the policy change to all in-network MAT-authorized providers.


Medicaid Fraud

Massachusetts Attorney General Settles with Adult Day Health Provider Over False Billing Allegations

  • Massachusetts AG Maura Healey reached a settlement with ADH Seller, LLC, doing business as New England Community Care, LLC (“NECC”), to resolve allegations that the company inappropriately billed MassHealth, the state’s Medicaid program.
  • According to the AG’s office, between August 2012 and September 2014, the company allegedly submitted claims to MassHealth that overstated the amount of time its patients received services. The overbilling was allegedly discovered when NECC was sold to another management company, Civitas Solutions, Inc., and Medicaid billing substantially decreased.
  • Under the terms of the settlement, NECC must pay $225,000 to MassHealth.